Matters Memo

City of Boulder City Council Agenda Item Meeting Date: November 20, 2025 Agenda Title Economic Development Financing Tools (BURA & Metro Districts) Update and Discussion

Staff Contact • •

Jennifer Pinsonneault, Economic Vitality Manager, City Manager's Office Mark Woulf, Assistant City Manager

Executive Summary The purpose of this item is to provide a summary of the progress made on researching and updating key economic development financing tools, specifically the Boulder Urban Renewal Authority (BURA) and Metropolitan Districts. This item supports the 20242025 City Council priority of supporting economic vitality, addressing commercial vacancies, and broadening small business support with new and enhanced economic development tools and programs. This initiative is part of a larger strategy to provide a robust suite of economic development tools, including the potential use of General Improvement Districts (GIDs) and Downtown Development Authorities (DDAs), and other tools to facilitate targeted investment and revitalization. •

Metropolitan Districts (MDs): MDs are a mechanism for financing new public infrastructure in new development or redevelopment within a distinct geographic district. While financial risk shifts to the developer(s) and future residents in MDs, municipalities face risks due to initial developer control. This memorandum seeks council direction on the next policy steps – such as whether City Council is

interested in regulating metro districts by passing regulations and adopting a model service plan ordinance – to make certain MDs are only established through a transparent, accountable, and fiscally responsible process that aligns with city goals. •

BURA Update: Progress has been made on expanding BURA’s Board of Commissioners to meet current state law requirements, enabling BURA to consider new urban renewal areas and utilize Tax Increment Financing (TIF) for targeted investments. This item provides an update on that progress and seeks feedback.

Questions for Council 1. Does City Council wish to provide direction to staff to bring forward a model ordinance to regulate Metropolitan Districts? 2. If yes, does City Council have initial feedback regarding any of the key policy items identified in the Analysis section below? 3. Does City Council have any feedback on the progress of the initiative to revitalize BURA?

Alignment with City Plans and City Council History Sustainability, Equity and Resilience (SER) Framework and Citywide Strategic Plan Alignment SER Framework Goal Area The initiatives outlined in this memorandum align with the Economic Vitality goal area of the SER Framework. Citywide Strategic Plan The expansion of BURA and exploration of metropolitan districts as potential economic development tools align with Strategy 14 in the Citywide Strategic Plan. Alignment with Additional City Plans The revitalization of BURA and potential regulation of MDs align with the Boulder Valley Comprehensive Plan and the City’s Economic Vitality Strategy.

City Council History Previous conversations with council related to this item include the Advancing Key Economic Development Policy Initiatives item discussed during the City Council Special Meeting on July 24, 2025, and the Economic Development Plan and Program Enhancements Update: Economic Vitality Strategy Review and Commercial Area

Connections and Quality of Life Improvements Update: District Analysis Results and Recommendations items discussed during the City Council Study Session on April 24, 2025.

Analysis A. Metropolitan Districts MDs are quasi-municipal entities established under Title 32, C.R.S. MDs are one of many tools to help accelerate development or redevelopment through area-specific taxing and financing. They are typically formed at the earliest stages of development to finance and construct essential public infrastructure (e.g., roads, water, sewer, parks, etc.) that could not be practically provided by the encompassing municipality or another public entity within a reasonable time. MDs can only fund and operate limited core services and may not exercise certain powers (such as law enforcement or land use law). Recent state reforms have addressed many issues with MDs, such as requiring transparency (HB 25-1219) and a mechanism for city councils to review property tax exemptions when conflicts of interest are disclosed (HB 25-1289); however, no single state body proactively regulates MDs. Therefore, it is in the interest of the city to impose local standards to ensure any use of MDs closely complies with city goals and interests. The adoption of a comprehensive ordinance to regulate the creation of MDs is the best strategic practice while providing maximum legal protection for the city and future residents within an MD. These regulations allow the city to impose restrictions on debt, governance, and service scope and may be more protective than the current state requirements. Formation Process The formation of MDs is governed by the state’s Special District Act (Title 32, C.R.S.). The process requires review and consent from the local governing body and a judicial order following an election. The key steps are as follows: 1. Service Plan Submission and Local Government Review The process begins with a developer(s) preparing and submitting a service plan to the governing body in which the proposed MD will be located. A service plan is a district’s governing document and outlines the specific functions and powers, including the proposed services, boundaries, mill levies, and debt limits. The proposed district cannot be organized unless the governing body (City Council) approves a service plan by resolution. The city has the authority to approve, deny, or approve the plan with specific conditions.

2. Petition for Organization to District Court If the local government approves a service plan, the eligible electors of the district (typically the property owner(s)/developer(s)) must formally request judicial authorization. If the petition meets statutory requirements, the court orders an election to be held for electors within the district. 3. Formation Election and Decree If the majority of votes cast are in favor of organization, the district court issues an order and decree formally organizing the MD. Purpose of Model Ordinance Once a service plan is submitted to the city, the city is required to review and take action. The purpose of a regulating ordinance is to: 1) provide a clear policy with respect to whether MDs will be considered and in what circumstances; and 2) create a clear and consistent framework for considering service plans if submitted to the city. While the city can consider a service plan without a local regulatory framework, the financial protection can fluctuate over time based on the economic and development environment, and the burden on staff and policymakers is high when reviewing and negotiating each component of individual service plans. An ordinance and model service plan can help address these challenges by providing non-negotiable financial standards, consistency and predictability for both policymakers and the development community that mitigates financial and legal risk. There are several key policy levers that would require council input in the consideration of the regulatory framework. Table 1, below, outlines several notable policy levers. TABLE 1. Key Policy Issues Policy Area

Potential Requirement

Considerations

Location and Type of Development

Establish what kinds of development will qualify for MDs and where within the city.

Potential to limit to only certain types of development, such as commercial or residential or some percentage.

Maximum Mill Levy Cap (Debt & Operations)

Establish strict, nonadjustable maximum mill levy caps for both debt service and operations.

Limits the long-term tax burden on property owners. State law requires service plans to specify the maximum mill levy for general obligation bonds.

Maximum Debt Term / Sunset

Establish a definite maximum term (sunset clause) for the debt service mill levy imposed on residential property.

Ensures debt is repaid efficiently and prevents multi-generational obligations.

Limitation on Service Scope

Limit the types of services an MD can provide to prevent overlap, duplication, or interference with services the city desires to retain exclusively.

The city determines which powers allowed under the Special District Act the MD may exercise, preventing the creation of competing or duplicative governmental entities.

Governance Transition & Asset Control

Require explicit, accelerated triggers (based on both time and completion) for the mandatory transition of the MD board from developer control to resident control. An IGA can also mandate the legal conveyance of all public improvements to the city upon acceptance.

Mitigates the high-risk period of debt issuance by developer boards before property owners take control. Ensures city ownership, standardized maintenance, and legal immunity protection.

Prohibition/Limitation of Developer Bonds

Limit or outright prohibit the use of privately placed debt ("developer bonds") or impose strict controls on the interest rates and total volume of such debt.

Addresses the fundamental conflict of interest where developers sell debt to themselves, often weeks before property owners take over the board.

Policy Direction As a part of the implementation of the city’s Economic Vitality Strategy, this memorandum provides the initial research into MDs and some of the major policy choices. Due to staff time required to bring forward an ordinance and model service plan, staff is seeking policy direction (Nod of Five) to determine if there is interest in this regulation. If council determines staff should bring forward the regulatory framework, it would be additionally helpful to learn if council has specific interest in any of the policy areas (Table 1) to pursue in draft legislation. B. Boulder Urban Renewal Authority Update BURA was created in 1979 and currently has five commissioners, including two open seats. In 2015, Colorado state urban renewal law was updated to require urban renewal authorities to have 13 commissioners, including at least 10 of whom are appointed by

the mayor, one commissioner appointed by the board of county commissioners, one commissioner who is an elected member of the board of education, and a commissioner who is selected by an agreement of the special districts levying a mill levy with the city. While BURA can continue to operate with five commissioners, the authority cannot consider new urban renewal areas, new urban renewal plans, or tax increment financing until the number of commissioners is expanded to be consistent with current state law. Since July, progress has been made on expanding BURA and enabling it to consider and establish additional urban renewal areas. Steps that have been taken include: • • •

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Preliminary legal review and internal planning for BURA expansion. Communication with current BURA commissioners and drafting of resolutions and other materials for consideration. Special meeting of current BURA commissioners on October 28, 2025, to consider and pass a resolution authorizing the BURA Executive Director (currently the Boulder City Manager) to negotiate and execute agreements on behalf of the authority for condition studies to identify potential urban renewal areas and related activities to help facilitate redevelopment, particularly in areas of the city seeking enhanced economic activity and investment. At the same special meeting, BURA commissioners considered an amendment to BURA bylaws expanding the number of commissioners from five to thirteen, including three representatives of overlapping taxing entities. Issuance of a Request for Proposals (RFP) through the City Manager’s Office on behalf of BURA for technical and advisory services to support the consideration and potential establishment of urban renewal areas in the city of Boulder. Special meeting of current BURA commissioners on November 6, 2025, where the resolution amending the bylaws to expand the number of commissioners was passed. Preparation of a proposed Administrative Cost Allocation Agreement between the City of Boulder and BURA which is presented to council for consideration in a separate City Council Agenda Item.

Further actions to be taken over the next few months include: • •

November 2025: Presentation of Administration Cost Allocation Agreement to City Council and BURA for consideration and approval. November – December 2025: Selection, negotiation, and agreement with consultant to conduct studies and perform other activities related to identifying potential new urban renewal areas.

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November 2025 – March 2026: Recruitment of BURA commissioners through the regular appointment process for city boards and commissions and recruitment of commissioners appointed by taxing entities.

Purpose of Updating Urban Renewal Authority A robust economic development program is essential for the long-term fiscal health of the city. Urban renewal is a strategic tool designed to promote positive net fiscal impact for the city by accelerating and spurring economic activity that may not otherwise occur. While the use of urban renewal as an economic development tool is intended to generate long-term economic returns and enhance fiscal health through increased tax revenue and private investment, initial phases will involve upfront workplan commitments and potential budgetary allocations for studies and program development. Urban renewal projects have the potential to generate new revenues for the city through sales and use taxes, property taxes, permit and licensing fees, and other fees. Each new urban renewal area, urban renewal plan, and project that uses urban renewal tools will be evaluated to understand and maximize benefit for the city. The appointment of new commissioners represents an initial step required to consider any new urban renewal areas. Any new urban renewal area must be reviewed and approved by City Council.

Anticipated Fiscal and Workplan Impacts The update and implementation of BURA and other public financing tools are currently in the 2025 staff workplan and proposed 2026 staff workplan. Overall, effective oversight of public financing tools requires a rigorous fiscal impact analysis to minimize city risk exposure and ensure that development strategies are sustainable. Metro Districts The fiscal analysis for MD service plans focus on a district's capacity to repay debt and the resulting tax burden on residents. The service plan must include a financial plan detailing all proposed indebtedness, estimated costs for infrastructure, and maximum interest rates. During the service plan review phase, staff assess the viability of the financing plan and compliance with the city's mandated maximum mill levy cap. The analysis determines if the district can service its proposed debt (principal and interest) based on projected tax revenues. Urban Renewal

The financial analysis for a new Urban Renewal Area utilizing TIF focuses on demonstrating the need for public assistance and establishing the amount of funding available. The core requirement is proving the development would not occur without the leverage of TIF to fill the financing gap (the difference between total project cost and the level of private financing the project can support). Analysts calculate the TIF capacity, which is the anticipated incremental sales and/or property tax revenue generated above a base year. This financial analysis, including the impact analysis for overlapping taxing entities, is typically completed before the Urban Renewal Plan is adopted by the council/BURA. Under the proposed intergovernmental agreement between the city and BURA, staff time and expenses for studies and other expenses, including those related to the exploration and establishment of new urban renewal areas, would be reimbursed by BURA through revenue they receive from urban renewal projects and plans.

Equity Analysis Expansion of BURA would provide a new economic development tool that could be used to facilitate investment and revitalization efforts in areas throughout the city, supporting a sustainable and healthy economy. A robust and growing economy is foundational to the city’s overall well-being, and a strong economic base is needed to provide sufficient sales and use taxes, property taxes, and other revenues to fund essential programs and services such as affordable housing, social services, environmental initiatives, public safety, and many others. However, the use of specialized financing tools introduces specific equity considerations that must be proactively managed to prevent disproportionate burdens on diverse populations. MD financing can provide unique opportunities for homeownership (e.g. lowering the required down payment). However, the higher property tax mill levy could disproportionately impact low- and middle-income households within a MD. Strict caps on mill levies and terms, enforced via a service plan developed from the city’s model service plan, are important mitigation measures. Redevelopment, in general, can facilitate targeted investment and job creation. A primary equity risk is the potential for gentrification and displacement of long-time residents, renters, and local businesses due to the development itself and/or rising property values and rents. The city’s oversight strategy can help mitigate this potential burden by ensuring that affordable and middle-income housing standards are incorporated within development

plans. Additionally, utilizing the Racial Equity Instrument during the consideration of any specific public financing will help ensure anti-displacement strategies are incorporated to the greatest extent practicable.

Climate, Resilience, and Sustainability Considerations The expansion of economic financing tools is strongly aligned with the City's Sustainability, Equity, and Resilience (SER) Framework and broader climate goals, and are designed to support a more resilient and sustainable economy. Development or redevelopment in specific areas that align with Boulder Valley Comprehensive Plan guidance can significantly contribute to broader sustainability outcomes by promoting compact, mixed-use development, reducing vehicle miles traveled, and optimizing existing infrastructure. Economic development financing tools can be used to actively incentivize projects that demonstrate strong environmental stewardship, including sustainable building practices, reduced energy and water consumption, integration of renewable energy, and support for alternative transportation. The tool can also contribute to a more diversified and resilient local economy, better equipped to withstand future environmental and economic shocks, and to advance Boulder's leadership in climate action.

Community Engagement Expansion of BURA and exploration of potential new urban renewal areas will involve working with residents, businesses, community groups, commercial property owners and brokers, and partner organizations such as Boulder Chamber, Boulder Small Business Development Center (SBDC), Downtown Boulder Partnership, the Latino Chamber of Boulder County, Visit Boulder and others.

Next Steps for City Council • • •

Consideration of a proposed Administrative Cost Allocation Agreement between the City of Boulder and BURA. Consideration of appointments of eligible applicants to BURA. Consideration of an ordinance regulating MDs, which would include a model service plan (if directed).

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Attachments A - Metropolitan Districts Presentation